5 Tips on Budgeting

1 – Think of a budget as a useful tool—a written financial plan that helps you set goals and measure progress.

2 – Start by coming up with a sales revenue target. Make it your best estimate.

3 – Based on past experience, estimate your cost of goods sold (e.g., 70 percent of sales) and subtract it from the sales revenue to come up with your estimated gross margin.

4 – Forecast variable expenses (items such as travel and commissions that vary according to the level of sales) and fixed expenses (items like taxes and rent that stay the same, regardless of sales). Subtract these expenses from your gross margin to arrive at your estimated net income (before federal taxes).

5 – Break your annual budget into quarters and monitor your progress every three months to detect problems and make corrections.

Brought to you by SCORE “Counselors to America’s Small Business.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s